China is trying to reverse its slowdown in economic growth by spurring house sales through the removal of restrictions on bank loans. A boost in construction, it's hoped, will curb the current deflationary trend, which is depressing corporate profits and business investment.
The encouragement of citizens to become homeowners coincides with the abolition of subsidized housing. But some of China's economists fear today's prevailing climate of deflation and falling real estate values might encourage would-be homeowners to wait and see. In spite of generous terms for loans, many Chinese could also be reluctant to spend their life savings on a home at a time when many jobs are under threat.